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It is time for more physician and nursing representation on hospital boards

Authors:

Abstract

Members of hospital boards are fiduciaries with a legal responsibility to fulfilling the hospital’s mission. Members represent a variety of community members and are responsible for ensuring patient safety and quality of care as well as evaluating the chief executive. Clinicians serve on the board but their numbers are limited and generally under 20%. We review the current state of hospital boards and suggest that physicians, nurses and other clinicians contribute considerably to expertise related to patient safety and more of them should be appointed to hospital boards.
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Journal of Hospital & Medical Management
ISSN 2471-9781
2016
Vol. 2 No. 1: 6
Research Article
DOI: 10.4172/2471-9781.100011
1
© Under License of Creative Commons Attribution 3.0 License | This article is available in: http://hospital-medical-management.imedpub.com/archive.php
Bhagwan Satiani and
Suraj Prakash
The Ohio State University College of
Medicine, USA
Corresponding author: Bhagwan Saani
Bhagwan.saani@osumc.edu
Professor Clinical Surgery, The Ohio State
University College of Medicine, St# 700;
376 W. 10th Avenue, Columbus, OH 43210,
USA.
Tel: 614-293-8536
Fax: 614-293-8902
Citation: Saani B, Prakash S. It is Time for
More Physician and Nursing Representaon
on Hospital Boards in the US. J Hosp Med
Manage. 2016, 2:1.
Introduction
According to the American Hospital Associaon, there are
currently 5,627 registered hospitals in the US, of which 87.5% are
community hospitals [1]. Among community hospitals, 58% are
nongovernment owned not-for-prot (NFP), 20% are state and
local government funded and 19% are investor-owned for-prot.
Federal government hospitals comprise 7.2% of all registered
hospitals. The remaining hospitals are nonfederal psychiatric
hospitals, nonfederal long term care hospitals and hospital units
of instuons (i.e. prison hospitals, college inrmaries, etc.).
Hospital boards are governing bodies that serve in both an
advisory and oversight capacity in the interest of a hospital’s
owners, which in all NFP’s are local communies. In for–prot
hospitals, most owners are shareholders or private owners. By
design, boards are intended to act as independent agents of the
hospital as an intermediary between execuve management
and hospital ownership. Ownership of hospitals across the US
varies greatly and includes public ownership (i.e. through publicly
traded stocks), private ownership and government ownership.
The specic structure, membership and dues of boards are
dictated by the organizaon’s bylaws.
Board Composion and Responsibilies
The senior author has served on a large NFP health system board
for several years. In addion, a google search was conducted
using words like: hospital board, hospital board trustee, physician
board members, nursing hospital board members and hospital
board compensaon.
Hospital boards are generally made up of representaves
from the local community such as business leaders, lawyers,
government and private sector leaders, physicians, nurses and
others [2]. Medical sta and the board have dierent roles and
responsibilies in a hospital. The medical sta’s primary role is to
oversee quality, paent safety and physician credenaling. Typical
responsibilies of hospital boards include the establishment of a
broad organizaon strategy, nancial resource allocaon, internal
auding, risk management, future board member selecon and
execuve management nominaon/selecon. As it pertains to
a hospital CEO, hospital boards are responsible for evaluang
and assessing execuve performance as well as seng execuve
compensaon.
The board has many duciary responsibilies but the two most
important dues are ensuring paent safety/quality of care
and evaluang the hospital chief execuve ocer. These board
representaves contribute much to the hospital due to their
backgrounds in nance, ethics, strategy, markeng, negoaons,
fund raising and other important areas of experse. Physician
and nursing parcipaon on hospital boards provides experse
on connuous quality improvement and higher quality of care
[3-5]. As the single largest component of clinical sta, nurses
directly interface with paents for the greatest percentage of
me [6]. This gives them a unique awareness into the healthcare
Abstract
Members of hospital boards are duciaries with a legal responsibility to fullling
the hospital’s mission. Members represent a variety of community members and
are responsible for ensuring paent safety and quality of care as well as evaluang
the chief execuve. Clinicians serve on the board but their numbers are limited
and generally under 20%. We review the current state of hospital boards and
suggest that physicians, nurses and other clinicians contribute considerably to
experse related to paent safety and more of them should be appointed to
hospital boards.
It is Time for More Physician and Nursing
Representaon on Hospital Boards in the US
Received: May 11, 2016; Accepted: June 22, 2016; Published: June 27, 2016
ARCHIVOS DE MEDICINA
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2016
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ISSN 2471-9781
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boards shows a board’s willingness to engage and be responsive
to the needs of physicians and nurses [16]. By having a seat at
the board room table, this would facilitate clinician buy-in with
regards to newly implemented policies and iniaves. At a me
of sweeping healthcare reform, quality and safety are becoming
more inextricably linked to hospital reimbursement. Physicians
and nurses possess invaluable knowledge of clinical problems
and pracce, acquired through years of experience that informs
hospital boards.
Reluctance to Increase Physician and
Nurse Representaon on Hospital
Boards
A common cause of apprehension about the expansion of clinician
membership on hospitals boards is the concern for conicts
of interest. The potenal for conict of interest is applicable
to all boards members, clinician or not, and can be migated
with careful selecon of board members. Boards should take
care to select clinicians who acknowledge that the duciary
duty of boards is to fulll its mission as opposed to sasfying a
parcularly stakeholder’s desires [16]. Boards should rigorously
evaluate the relaonships of clinicians with other organizaons
and possible competors. This process can help eliminate
clinicians with compeng interests from being selected. Boards
should select clinicians based on a broad scope of merit, such as
prior leadership and management experience. This ensures that
they have the requisite skill set to serve in a governance capacity.
Such an example would be a physician who has served as a chief
medical ocer or medical sta president at a noncompeng
hospital. Government regulaons do restrict hospitals from
packing boards with clinicians. An independent board free from
inuence is mandated by the IRS, federal and state laws. The
recent Sarbanes-Oxley governance law requires the majority of
board members and all members of compensaon and audit
commiees to be independent, meaning they have to have no
direct or indirect material conict of interest. For this reason,
many clinician board members are ex-ocio (seated because
of their posion on the medical sta) non-vong members.
However, this does not prevent them from speaking up in
paent care and other issues important to physicians. Federal
tax regulaons require a NFP organizaon to declare on IRS Form
990 how many of the board's members are independent. This
means that among other tests for being classied as independent,
any such member must not receive direct compensaon as an
employee, or if they do, total compensaon less than $10,000
as an independent contractor during that tax year. Most NFP
hospital board members serve without compensaon with
only about 10-15% being compensated although government
sponsored hospitals compensate about 16% of board members
[14,17]. The increasing employment of physicians by hospitals
is creang a problem for hospitals that need independent
directors on their boards. Since 80% hospitals are NFP, the IRS
limits the membership of insiders (employed or acve sta
physicians) to less than half. The compensaon commiee, in
parcular, according to Secon 4958 Rebuable Presumpon
needs of the community [7]. Healthcare membership on hospital
boards provides a paent care perspecve on all board decisions
such that paent safety and quality of care are not compromised.
Clinician Representaon
Evidence supports the asseron that physician and other
clinician board members greatly contribute to decision making
in terms of quality of care, paent safety and overall health
system performance [8]. Using Hospital Quality Alliance (HQA)
and Hospital Compare data, a US Department of Health and
Human Services database, on NFP hospitals in California, Gai
and Krishnan documented that the absence of physicians on the
board is associated with a decrease of 3 to 5 percentage points in
3 of 4 measures of care quality [9].
There are varying schools of thought regarding physician and
nursing representaon on hospital boards. The Joint Commission
has explicitly stated that medical sta must collaborate with
governing bodies (i.e. boards), chief execuves and other senior
management to achieve hospital goals [10]. However, they fell
short of specifying the number or proporon of board members
that should be medical sta. In a 2009 survey, the typical NFP
hospital had between 14 and 17 board members, of which an
average of 12 were independent (not hospital employees)
and an average of 2 were physicians [11,12]. In a 2011 survey
of 14 large hospital organizaons, physicians comprised 14%
of board members, nurses comprised 6% of board members
and the remaining 80% were non-healthcare providers (Table
1) [13]. Among all 14 CEOs and 57 board members of these
surveyed organizaons, 59% of respondents stated that board
deliberaons would benet from addional experse. The total
average number of physicians on hospital boards was 2.5 with
a median of 1 in 2013 [14]. In 2015, these gures were 2.7 and
1 respecvely, thus there has not been a signicant change in
physician representaon on hospital boards over recent years.
In a 2010 online survey of more than 1,000 physicians, 56% of
respondents cited the lack of physician leadership/representaon
on the board as a reason for lack of trust in hospital relaonships
[15]. Furthermore, as previously cited, 59% of surveyed CEOs
and board members state that board deliberaons would
benet from addional experse [13]. Increased healthcare
provider representaons on boards would increase both trust
of hospital boards among healthcare providers and experse
in board deliberaons. Medical sta representaon on hospital
Board composition in
faith-based systems
(n=179)
Board composition
in secular systems
(n=95)
Board composition
in all systems
(n=274)
Nurses * 16 (9%) 2 (2%) 17 (6%)
Physicians 19 (11%) 17 (18%) 38 (14%)
Other80% 143 (80%) 76 (80%) 219 (80%)
179 (100%) 95(100%) 274 (100%)
P<0.05 (Chi square test demonstrates signicantly dierent proporons of
nurses in the board composions of faith based versus secular systems.
Used with permission from L. Prybil PhD. hp://www.americangovernance.
com/resources/reports/governance-reports/2012/2012-prybil-report.
pdf.
Table 1 Clinical composion of large system boards.
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2016
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© Under License of Creative Commons Attribution 3.0 License
of Reasonableness criteria, cannot have physician insiders on it
[18]. Hospital CEOs may also be concerned with increased access
of physicians to board members, which may undermine the CEOs
authority. One of the authors (BS) has been on a NFP hospital
board and observed eorts to limit one-to-one access to board
members for fear of mixed messaging or undue inuence.
There is also some data suggesng that there is a negave
relaonship between donaons to a hospitals and physician
representaon [19].This is because the typical donor may not
prefer the resource allocaons in boards where physician and
other clinician representaon are high.
Selecon of Physician Board Members
More than 90% of physicians surveyed by consulng rm
PricewaterhouseCoopers said they should be involved in hospital
governance, such as serving on boards to assist in performance
improvement [15]. However, non-physician board members
and administrave execuves say most physicians lack the
knowledge base, in-terms of leadership and business skills, to
fully comprehend issues being debated at the board level. Simply
being a good clinician does not put the physician at the same level
as experienced board members. The other issue is that most, if
not all, physicians must be taught a skill set very dierent from
what is oered through a typical medical school curriculum. It is
encouraging that an increasing number of physicians are earning
their MBA, aending leadership programs or taking special
courses in business so they can sit at the management or board
room table and contribute to the partnership with other hospital
board members, hospital execuves and other senior managers
[20]. There should be a more formalized process of training for
physicians being recruited for board membership.
Another challenge in asking physicians to be part of a hospital
board is the me commitment. While it is an honor to be asked
to serve, if the physician decides to take the role seriously, the
commitment to meengs, commiees and special projects, such
as CEO or new board members elecon, involves enormous me.
This is parcularly a problem if the physician does not have a vote,
is expected to be a ‘rubber stamp’ or has an unpaid posion.
Impact of Physician Employment by
Hospitals
A recent survey of various types of hospital boards by the
Governance Instute shows that over recent years there has
been no change in physician representaon in 57% of surveyed
hospitals (Figure 1). 17.6% of hospitals do not disnguish
between employed and non-employed physicians with respect
to board membership and 13% do not allow employed physicians
to serve on the board [14]. In a report about board composion
in NFP hospitals, over half of survey respondents said there had
been no change since the physician employment picture started
to change [21]. 6.6% of responding NFP hospitals had a physician
board chairperson while 72% had chairpersons with nance or
business backgrounds.
In serial surveys by the Governance Instute, the proporon of
vong directors who were medical sta physicians was 16.5% in
2007, 16.0% in 2009 and 17.3% in 2011 [22]. In a similar survey by
Commonwealth Center for Governance Studies of 14 large health
systems, 14% of board members were physicians, 6% nurses and
the remainder was non-clinical persons [10].
Look at Hospital Boards in the Future
For many years, board appointments to hospitals have been
‘presge’ appointments, meaning that prominent community
members were asked to join, not necessarily based on their
knowledge about healthcare or a specic set of skills important
to the hospital, but because of their standing in the community.
However, with the transformaon in healthcare occurring every
day, board members are being asked to have some knowledge
and perspecve about populaon health, compliance, regulatory
changes, informaon technology, markeng, ethics, conicts of
interest, regulaons, public relaons and many other vital skills.
The future role of physicians on hospital boards is up for debate
as to their presence and degree of representaon. It may be
that with increasing employment and alignment with hospitals
that their primary role will be in execuve posions, such as in
a dyad role along with the CEO. In the value based care model,
physicians add great experse to the board in determining
what adds value to healthcare delivery [23]. Physicians cannot
generate work relave value units (a measure of value used in
the US Medicare reimbursement formula for physician services)
being on the board, parcipang in meengs and parcipang
on commiees, so there must be comparable compensaon for
their parcipaon.
However, as pointed out, because of legal limitaons, the
hospital board may have to nd rered physicians, physician
leaders outside their own health system or physicians working
in corporaons and pay them for their service. In the current,
as well as the future-environment, board composion will need
very diverse governance skills, but clinical orientaon of some
members will be crucial to educang the rest of the board. It is
clear that despite the changing healthcare environment, there
has not been a signicant change in physician representaon on
hospital boards even though the law allows, compensaon and
audit commiees withstanding, for more physician and nursing
representaon. It is now me for more, not less, full vong physician
members and other clinical experts on NFP hospital boards.
ARCHIVOS DE MEDICINA
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2016
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Journal of Hospital & Medical Management
ISSN 2471-9781
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Changes in physician representaon on the board resulng from employing physicians. Used with permission from Kathryn C. Peisert,
Managing Editor. The Governance Instute (2015) 21st-Century Care Delivery: Governing in the New Healthcare Industry.
Figure 1
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2016
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Journal of Hospital & Medical Management
ISSN 2471-9781
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Multiple articles have explained the benefits of nurses as hospital board members. The Nurses on Boards Coalition has been working for several years to increase the number of nurse board members. Yet, the percentage of hospital and health care board positions filled by nurses has been decreasing. This article shares what all nurse leaders can do to increase the visibility of nurses as competent, valuable voices at the board table.
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This study uses data from hospitals to test the hypothesis that management representation on nonprofit boards leads to “excessive” CEO pay, defined as compensation that exceeds the level predicted by a market wage model. We document a relatively small, but statistically significant, positive association between CEO pay and “insider” boards that include the CEO and other employees as members. Additional tests confirm that this result is not driven by endogenous board structure and that excess pay is greater in the absence of competition from for-profit hospitals. We then examine whether management board representation is associated with larger underlying agency concerns that lead to reduced donations. Our tests do not support this hypothesis but do, however, reveal a negative correlation between donations and physician representation on the board – suggesting a potential conflict between the interests of donors and non-employee physicians. Our overall evidence provides empirical support for modeling nonprofit organizations as consisting of competing stakeholders.
Governance in Large Nonprofit Health Systems: Current Profile and Emerging Patterns
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